4 ms·

The performance of the stock market is more related to the money printing by the federal reserve than anything else. Modern economics seems to deny this, and th

The performance of the stock market is more related to the money printing by the federal reserve than anything else. Modern economics seems to deny this, and thus will make articles like this.

djur 3y ago
Which money printing are you referring to?
- andy_ppp 3y ago
  I think the US printed a couple of TRILLION dollars during COVID. The money hasn’t gone anywhere so if you’re American and don’t have the $80000 per person someone else has your cash. Edit: not sure why you’re downvoting! It was actually $3.3tn in 2020 alone which is wild.
  - skybrian 3y ago
    > someone else has your cash It was never yours. The Fed doesn't give money away, it buys financial assets. What did you sell them? Also, the Fed has been selling assets lately, which does remove some money from the system.
  - pcdoodle 3y ago
    Wild indeed. When the velocity of it picks up, we will see distortion and it will be hard to decide what a thing is worth. If everyone had a free 80K, i'm not selling my used car cheap anymore.
  - fizl 3y ago
    $3.3tn is $10k per US resident, not $80k.
  - myko 3y ago
    I think that's more like $9k?
  - djur 3y ago
    That was during Covid, but it is 2024 now. The Fed started quantitative tightening in June 2022 and has sold over $1.3 trillion in assets; it also raised interest rates to the highest level in two decades. These are traditionally considered contractionary monetary policies, the opposite of "printing money".
skybrian 3y ago
M1 and the Fed's balance sheet are down since 2022, though. What "money printing" do you mean?
- downrightmike 3y ago
  The $4T that businesses got handed in march 2020, aka 20% of all USA currency ever printed. Don't think they aren't still playing with it.
  - nl 3y ago
    But that money has already entered the stock market. It doesn't explain it now. Interest rates are high now, so in theory investment in the stock market should be lower (and it was for a long time - see all the people investing in treasuries to get the great and safe returns)
    - downrightmike 3y ago
      You assume it entered the stock market and didn't go elsewhere. There's no way to know where that money went.
  - _fizz_buzz_ 3y ago
    2020 is 4 years ago …
    - Ralo 3y ago
      It's been living in the reverse repo market, it's slowly trickling out.
      - nl 3y ago
        > It's been living in the reverse repo market, it's slowly trickling out. While this is true, the "trickling out" timing doesn't appear to correlate very well stock market increases. It's true that reverse repos have been decreasing and the stock market increasing. But the timing of movement seems too far out for there to be much of a causal link. https://www.newyorkfed.org/markets/desk-operations/reverse-repo https://www.newyorkfed.org/markets/desk-operations/reverse-r... https://finance.yahoo.com/quote/%5EIXIC/ https://finance.yahoo.com/quote/%5EIXIC/
JKCalhoun 3y ago
Wouldn't printing money have an inverse effect on the stock market?
- kriops 3y ago
  If you devalue a currency by 1/10 and everything else is equal, then everything will cost 10/9 more measured in that currency.
  - quickthrower2 3y ago
    To a point. Who wants to own stocks in a country with hyperinflation. Of course this is a nitpick because it is unlikely to happen to the US anytime soon.
- downrightmike 3y ago
  No, stimulus affects the market positively. It was a K-type recovery, the market went up and the real economy didn't. The market dislocated in the 80's and every decade or so we have a crash that makes the rich richer. Whatever comes along, they weasel more money from us and the government.
quickthrower2 3y ago
Another angle is the stock market is tech so how is centralised tech dominance doing? Is EEE going well?
jacobsimon 3y ago
This is exactly what the article is saying - low interest rates set by the fed and corporate tax rates in the last decade led to higher corporate profits, and higher multiples, which was also probably fueled by investors with more cash and corporate buybacks.

The performance of the stock market is more related to the money printing by the federal reserve than anything else. Modern economics seems to deny this, and thus will make articles like this.

djur 3y ago

Which money printing are you referring to?

andy_ppp 3y ago
I think the US printed a couple of TRILLION dollars during COVID. The money hasn’t gone anywhere so if you’re American and don’t have the $80000 per person someone else has your cash. Edit: not sure why you’re downvoting! It was actually $3.3tn in 2020 alone which is wild.
- skybrian 3y ago
  > someone else has your cash It was never yours. The Fed doesn't give money away, it buys financial assets. What did you sell them? Also, the Fed has been selling assets lately, which does remove some money from the system.
- pcdoodle 3y ago
  Wild indeed. When the velocity of it picks up, we will see distortion and it will be hard to decide what a thing is worth. If everyone had a free 80K, i'm not selling my used car cheap anymore.
- fizl 3y ago
  $3.3tn is $10k per US resident, not $80k.
- myko 3y ago
  I think that's more like $9k?
- djur 3y ago
  That was during Covid, but it is 2024 now. The Fed started quantitative tightening in June 2022 and has sold over $1.3 trillion in assets; it also raised interest rates to the highest level in two decades. These are traditionally considered contractionary monetary policies, the opposite of "printing money".

skybrian 3y ago

M1 and the Fed's balance sheet are down since 2022, though. What "money printing" do you mean?

downrightmike 3y ago
The $4T that businesses got handed in march 2020, aka 20% of all USA currency ever printed. Don't think they aren't still playing with it.
- nl 3y ago
  But that money has already entered the stock market. It doesn't explain it now. Interest rates are high now, so in theory investment in the stock market should be lower (and it was for a long time - see all the people investing in treasuries to get the great and safe returns)
  - downrightmike 3y ago
    You assume it entered the stock market and didn't go elsewhere. There's no way to know where that money went.
- _fizz_buzz_ 3y ago
  2020 is 4 years ago …
  - Ralo 3y ago
    It's been living in the reverse repo market, it's slowly trickling out.
    - nl 3y ago
      > It's been living in the reverse repo market, it's slowly trickling out. While this is true, the "trickling out" timing doesn't appear to correlate very well stock market increases. It's true that reverse repos have been decreasing and the stock market increasing. But the timing of movement seems too far out for there to be much of a causal link. https://www.newyorkfed.org/markets/desk-operations/reverse-repo https://www.newyorkfed.org/markets/desk-operations/reverse-r... https://finance.yahoo.com/quote/%5EIXIC/ https://finance.yahoo.com/quote/%5EIXIC/

JKCalhoun 3y ago

Wouldn't printing money have an inverse effect on the stock market?

kriops 3y ago
If you devalue a currency by 1/10 and everything else is equal, then everything will cost 10/9 more measured in that currency.
- quickthrower2 3y ago
  To a point. Who wants to own stocks in a country with hyperinflation. Of course this is a nitpick because it is unlikely to happen to the US anytime soon.
downrightmike 3y ago
No, stimulus affects the market positively. It was a K-type recovery, the market went up and the real economy didn't. The market dislocated in the 80's and every decade or so we have a crash that makes the rich richer. Whatever comes along, they weasel more money from us and the government.

quickthrower2 3y ago

Another angle is the stock market is tech so how is centralised tech dominance doing? Is EEE going well?

jacobsimon 3y ago

This is exactly what the article is saying - low interest rates set by the fed and corporate tax rates in the last decade led to higher corporate profits, and higher multiples, which was also probably fueled by investors with more cash and corporate buybacks.